Flying back from Belize this weekend our flight was overbooked and the airline asked for a volunteer to miss the flight in return for a free night in a hotel and a $300 voucher towards future travel. The airline we were flying (Southwest) knows how many seats are on their plane, so why do they and the other airlines overbook?
Airlines overbook because they know that some people won’t show up for their flight. Passengers miss planes because of traffic, they oversleep, their plans change, they forget they booked a flight they no longer needed to take, etc. Airlines intentionally overbook flights so they don’t have empty seats. Airlines are actually pretty good a predicting how many people will miss flights. Using historical records and big data they use all sorts of factors in algorithms to estimate how many people will miss their flight. Some factors are time of day, the departure city, the weather, and whether it’s a couple returning from a weekend trip vs. a single traveler likely traveling on business (that’s why when you book some airlines ask you the purpose of your travel).
What happens if nobody volunteers to be bumped? The passenger(s) who are forcibly bumped are compensated by the airline according to a federal regulation. The amount of compensation is 200% – $400% of the ticket amount depending on how close to your original arrival time they are able to get you to your destination.